China's Elevated Bus Project Seemed Too Good To Be True — And It Was01:30

Qinhuangdao's elevated bus, seen last month in this photo, will not move forward. The municipal government denied it had endorsed the project, and last month began dismantling the test site.

In China, a futuristic new kind of urban transport that its promoters claimed would beat traffic jams appears to have gone off the rails. That became clear last week when police arrested the people behind the project on suspicion of fraud.

Dubbed the Transit Elevated Bus, the vehicle looks a bit like a catamaran on rails or a bus that straddles two lanes of traffic.

Gridlock? No problem. The electric contraption would just whisk its cabin full of 300 or so passengers right over it.

Following the project's unveiling in 2010, the vehicle's designer told the official People's Daily newspaper that five Chinese cities had signed contracts to establish pilot projects using the buses.

Time magazine hailed it as one of "The 50 Best Inventions of 2010." Last August, a prototype actually made test runs on the streets of the northern port city of Qinhuangdao.

But experts raised doubts about the feasibility of the idea from the very start.

How, they asked, would the straight vehicle handle curved streets? How would it turn corners or avoid pedestrian overpasses and tall trucks? And how would cars driving underneath the bus be able to see road signs or switch lanes without causing accidents?

"The elevated bus would just get stuck in traffic and make things even worse," says Shen Gang, an urban transport expert at Tongji University in Shanghai and an early critic of the project. "The idea was absurd, childish."

Yet the project continued to pick up speed. A model of the bus attracted attention at an international high-tech expo in Beijing last year.

In a video interview last year, Bai Zhiming, the entrepreneur who bought the patents for the elevated bus, boasted to the People's Daily that the Beijing municipal government had expressed interest in the project.

State media reported that investors pumped more than half a billion dollars into the project, after being promised returns of 12 percent. The scheme was to be funded by wealth management products sold by Bai's online lending platform.

China's government is trying to curb such schemes, which often prey on consumers with few attractive investment options — and who, when they lose their savings, often take to the streets in protest.

Suspicions mounted as the official rollout of the elevated bus system was repeatedly delayed. The Qinhuangdao municipal government denied it had endorsed the project, and last month began dismantling the test site.